Tim Lashar (standing, right), Luxaire brand marketing manager and outdoor products marketing manager for York Unitary Products Group, introduces Dick Harshaw (standing, left), president of Lodestar Consulting Systems, at the beginning of Harshaw’s session titled, “13 SEER Selling Strategies” at York Business Day 2005 at HVAC Comfortech.
In just a few short weeks, manufacturers will have to abide by the U.S. Department of Energy efficiency standard that states all new residential air conditioners and heat pumps must be a minimum of 13 SEER. This has been a huge change for manufacturers, and some estimate meeting the new standard may constitute the largest combined single capital outlay ever made by the HVAC manufacturing industry.

Even though the standard has required manufacturers to redesign their lines, develop new products, and reconfigure their factories, most state they are excited about the changes. Indeed, manufacturers are working diligently to reduce costs and differentiate their 13 SEER products from the competition.

Along with the changes, however, come concerns that the new 13-SEER products may be hard to come by in the short term, as manufacturers continue producing 10- to 12-SEER equipment right up to the deadline in order to meet increased demand. It remains to be seen how the actual changeover will go early next year, but manufacturers are working hard to ensure as smooth a transition as possible.

Increased Demand, Decreased Supply

Orders poured in this fall for 10- to 12-SEER equipment, and most manufacturers have increased production just to meet the demand. As Shawn Wood, light commercial rooftop product manager, Trane, Clarksville, Tenn., noted, "Our company has ramped up production in the same way that it always does when it sees an increase in orders."

There are several reasons why demand has been so strong, according to Drew Fitzgerald, vice president of marketing, residential and light commercial, Nordyne, St. Louis. "First, the summer heat lasted well into September for many parts of the country. This drained product out of the pipeline and depleted distributor inventories, so there were more reorders later into the season than we've seen in recent years. The second reason is that anticipated higher costs for new 13-SEER products created even more demand on manufacturers to produce less than 13-SEER products."

These dynamics, combined with hurricanes and early adopters of new, optimized 13-SEER products, have caused demand to be significantly higher than the previous year. Ed Raniszeski, director of market development and communication, Rheem Air Conditioning Division, Fort Smith, Ark., noted that the company's production rates for some product families have increased by over 200 percent when compared to 2004.

"As a baseline comparison, 2004 was the largest year in the industry's history for cooling product shipments at 7.4 million total units. 2005 may see as many as 8.4 million cooling units manufactured in the U.S.," he said.

This record volume has created a considerable challenge for equipment and component manufacturers to manage the increased demand for 10 SEER and for the new optimized 13-SEER products. Component suppliers, such as motor and compressor manufacturers, cannot produce enough product to meet unforeseen, unprecedented demands placed by air conditioning OEMs.

"Rheem and other manufacturers cannot satisfy the entire demand for 10-SEER products as a result of critical component supply shortfall," noted Raniszeski.

"Rheem has worked to minimize the impact by working closely with suppliers and customers to meet demand through logistics, management, and frequent, candid communication with distributors and contractors to ensure their understanding as well as to listen to their suggestions and ideas."

Mike Miles, cooling product manager, Lennox Industries, Dallas, agreed that availability of components has been one of the bigger challenges. The company has ramped up production "to the extent that we can obtain parts from our suppliers," he noted.

Lennox provides ongoing training to its dealers and distributors, so they will be ready for the 13 SEER transition.

Higher SEER Offerings

Fortunately there are only a few more weeks left to produce 10- to 12-SEER units, then manufacturers can focus solely on generating and marketing their new 13 SEER equipment. Manufacturers are eager to introduce their new products, as most companies have invested large sums of money into their research and development.

"The preparation process for the new 13 SEER efficiency standard has positively impacted our company's strategic growth," said Kevin Dudash, Bryant brand manager, Bryant Heating and Cooling Systems, Indianapolis. "We have been a part of the largest corporate investment in the history of our company. We have invested over $250 million in our new 13 SEER platform, which has supported a major plant remodeling in Collierville, Tenn., as well as historic levels of R&D, and hiring of additional, highly qualified personnel."

Andy Armstrong, director of marketing – North America, York International Corp., Unitary Products Group, Norman, Okla., added that York has also made sweeping changes to its organization. "Three years ago, UPG made a multi-year, multi-million dollar investment in its Wichita, Kan., residential-product manufacturing plant in order to bring an entirely new generation of premium products to the market, including the York Affinity™, Coleman Echelon™, and Luxaire Acclimate™ product lines."

As a result of all this investment, there are a whole host of product introductions that will be made over the next 12 months. Many of these new products go well beyond the 13 SEER minimum requirement, as manufacturers bet that consumers will be willing to purchase even higher efficiency equipment.

Rheem and Ruud plan to introduce 44 new products in 2006. The current Rheem and Ruud high-efficiency lineup includes a variety of 13 plus SEER condensers and heat pumps available in R-22 and R-410A refrigerants. The company's premium collection of 13- to 18-SEER equipment, called the Rheem Prestige Series and the Ruud Ultra Series, will be highly featured and technologically advanced, noted Raniszeski.

Johnny Johnson, Carrier brand manager, Carrier Corp., Indianapolis, stated that "Rather than settling for a series of retrofits or attempting to make due with existing technology, our company has invested more than a quarter of a billion dollars into researching and developing an entirely new platform ranging from 13 SEER units to our industry-leading Infinity Systems that provide 21 SEER efficiency. Our entire split-system Carrier cooling line is new for 2006."

Goodman will be offering efficiencies up to 16 SEER in its Goodman brand and true 18 SEER performance in its Amana brand, said Al Knight, product manager – split systems, Goodman Manufacturing Co., Houston. "We are adding Copeland ‘ComfortAlert' system indicators to our Amana brand products and adding products that use R-410A to our Goodman product line. These are just two of many enhancements to both product lines in the new design."

Fitzgerald stated that Nordyne will have a full line of 13 to 16 SEER equipment and has plans to enter the ultra-high SEER market with its new 23-SEER product line. "This will be the highest efficiency air conditioner to be available in the market. The full launch of the new FS4BI will take place in the first quarter of 2006, and the product will initially be available in two-, three-, and four-ton sizes, with a five-ton unit scheduled to follow."

Getting Smaller

With all the excitement surrounding the new product launches, there are more than a few concerns from contractors and distributors regarding the larger sized components that are needed for 13-SEER equipment. Many are concerned that larger condensing units will spill over onto sidewalks, while bigger evaporator coils will be difficult to install in restricted spaces.

Manufacturers have heard these concerns and are working to eliminate these issues. York, for example, will be introducing a new 13-SEER condensing unit that is built, essentially, in a 10 SEER package. "This new 13-SEER unit uses ‘micro channel' technology that has been proven in automotive radiators," stated Armstrong. "This technology allows higher efficiency without a corresponding increase in unit size. We believe this footprint is up to 30 percent smaller than competing, conventional 13-SEER condensing units."

Carrier's commitment to redesigning its split system line has allowed the company to maximize performance and address size issues in both indoor and outdoor sections. "Through this process of redesign, we have kept installation and service issues in mind. Our new 13-SEER units will be 20 percent smaller in size, weigh 30 percent less, and use 40 percent less refrigerant compared to most current 13-SEER units," said Johnson.

Nordyne has built its condensing units to fit within its current footprints, and will not be introducing any units larger than what they market today. Depending on the capacities, Fitzgerald noted, some evaporator coils will be increasing in size.

"We've redesigned our evaporator coils and air handlers to fit most common retrofit situations, so we don't anticipate any big issues with replacement installations."

Dudash added that Bryant will offer a wide variety of evaporator coil options that will make it easier for dealers to best address retrofit applications.

As the production of 10- to 12-SEER units winds down, everyone in the HVAC industry is looking eagerly - and probably somewhat apprehensively - at 2006. Contractors, distributors, and manufacturers are all affected by the new 13 SEER standard.

Publication date: 12/19/2005